- Businesses like the Cloud because it delivers
- A new Cloud benchmark has evolved
- Businesses are taking a step-by-step adoption approach to Cloud maturity
- Cloud is now the default for powering new business solutions
Cloud the way we see it“Where BusinessMeets Cloud” Shifts Rapidly. Fresh Insights into Adoption Trends, combined with insights from our client work, highlight the changes impacting the adoption of Cloud and how organizations are addressing key issues and challenges in leveraging it across their business. What is clear from our research is that organizationsThe impact of Cloud on today’s business is are keen on Cloud - not only as an IT platform - buteverywhere; from the foundations of technology as a business enabler that brings qualities, such asinfrastructure to information management, IT pay-per-use, flexibility and speed-to-implementation,investments and solutions, all the way to day-to- which drive business benefits, rather than focusingday business processes and new activities. Cloud on technical features. Cloud may be makingliterally permeates society, not only touching us in our IT somewhat invisible, but it is fast becoming apersonal lives, but also changing our expectations ubiquitous principle of service delivery.at work. It is also crucial to realize that the business benefitsCapgemini has been a pioneer in helping exploit of Cloud can be reaped without having to addCloud benefits for our customers. We saw early on complexity and risk to the management agenda.that by harnessing the power of the Cloud, we could Our own proposition, as a Cloud Orchestrator, aimshelp our clients achieve meaningful business change. to help our clients navigate this quickly-evolvingFurthermore, from my interactions with industry landscape without getting lost, being dazzled byleaders, it is clear that the benefits of Cloud are now choices, or following ineffective routes.well understood and can undoubtedly deliver new andsimpler operating models, faster routes to market and I believe we have a valuable and fresh perspective onenhanced bottom-line gains. This is why Cloud, to us, how to accelerate business transformation throughis a fundamental design principle that underpins the Cloud – putting the power of IT closer to the businessmajority of Capgemini’s solutions for our clients. than ever before. At Capgemini, we don’t see Cloud as a destination in itself. We see it as a better wayThus, benefiting from Cloud can take many different to reach your business destination, whatever yourforms. For example: Cloud powered a solution industry sector, and wherever you are in the world. Itwe developed that achieved a reduction of more is no longer the journey to the Cloud, but the Cloud-than a third in energy consumption for a regional enabled journey that matters. Simply, a new era wegovernment; we delivered Cloud-based infrastructure refer to as Business Cloud.strategies to reduce costs and improve qualityand service delivery for a major Consumer Goodscompany; and furthermore, we expanded thecustomer footprint and enhanced the online userexperience with a first-of-its-kind, Cloud-based, multi-channel ordering platform for a large North Americantelecommunications company. Paul HermelinAs Cloud has developed, so have our views. Our Chairman andglobal survey Business Cloud: The State of Play Chief Executive Officer 3
Changes DrivingCloud AdoptionWe all take it for granted nowadays that we can read and The resulting report, Business Cloud: The State of Playwrite emails using the Internet wherever we are, using our ShiftsRapidly. Fresh Insights into Cloud Adoption Trends,home computers and tablets, or in the street via smartphones. published by Capgemini in November 2012, has informed theWe appreciate being able to make photos easily available to thinking behind this paper, which focuses on the impact of thefriends and family, even if they live on the other side of the rapidly-emerging Business Cloud and provides guidance onworld. And we also share documents, insights and discussions the next steps to take.with our fellow-workers, at any time and place we want. Read the full report atNone of this would be possible without the Cloud. But www.capgemini.com/business-cloud-report. “individuals are not the only ones who appreciate the benefitsof the Cloud. Businesses are also weighing up its advantages,not just as a way of reducing their investments but also forexample in using IT resources more flexibly – according to thevolume of activity – and getting solutions up and running muchmore quickly than before. Cloud provides companies with a Cloud is not just achoice of how they organize infrastructures and applications,as well as different ways of working with service companies. technology issue. It’s anBut Cloud itself is changing too, with considerable strategic opportunity for businessand tactical shifts taking place. To establish the extent ofhow Cloud adoption is changing and its impact on the wider to truly transform theorganization, Capgemini commissioned original research way it works and evenusing an independent research company. embrace new commercialOur Cloud study consisted of 460 interviews with businessand technology executives from enterprise-sized organizations models for growth”(most with more than 10,000 employees) across six sectors:retail, financial services, energy/utilities, public, manufacturing/automotive, and telecom. The organizations have businessoperations in multiple countries, including US, Brazil, China,India, UK, France, Germany, Netherlands and Sweden. ITexecutives and line-of-business decision-makers were almostequally represented in our sample to give a rounded andbalanced view.4 Simply. Business Cloud.
Cloud the way we see itCloud Powers the BusinessTechnology LandscapeThe new reality of Cloud is that it is now perceived by theorganization as a whole as a powerful driver for businessinitiatives, rather than just an IT platform. It is therefore takingon a more strategic role within the organization –a phenomenon that we refer to as ‘Business Cloud’.Consider this:• The Cloud has now proven itself and the days of evangelization are almost over. The business side of the organization has recognized its potential and has become much more involved in decisions about Cloud and in commissioning its use.• This has led to heightened expectations by the business about the availability of quick, scalable, flexible and cost- effective solutions. This new benchmark of IT performance and value-for-money is rapidly becoming the norm against which internal and external IT organizations are being measured.• Most organizations have articulated a Cloud strategy that is being implemented using a careful, step-by-step approach. In this way, IT caution is being balanced by business enthusiasm.• The Cloud is already a default for new applications supporting high-growth “edge” business activities, much more than it currently is for existing, “legacy” applications.Cloud is taking on a more strategic, powerful and influentialrole within the organization, in which it is impacting onboth the business and IT sides of organizations. Thesedevelopments clearly indicate that the adoption of Cloud is setfor major change in the near future, and this paper providestangible next steps for consideration. 5
Cloud the way we see itBusiness Likes the CloudBecause It DeliversThe Cloud builds on advances in technology to quickly and technological foundations will be absorbed by the Cloud andeffortlessly supply IT services, but its role is now extending a new set of expectations will become the business norm.beyond the boundaries of the IT department. Our researchfound that decisions regarding the Cloud are increasingly Business benefits drive adoptionbeing made not only within the IT function of organizations, While cost reduction is considered the most important benefitbut also by the business, which in some cases is even taking of the Cloud by both IT and the business, many other factorsfinal responsibility for Cloud strategy (Figure 1). In our research, are driving Cloud adoption. An additional key driver from the45% of respondents said the business is driving the Cloud business perspective is reduced speed-to-market, namedagenda, compared to IT at 46%. as a business driver for Cloud by 41% of respondents in our research. Improvement in operational efficiencies – forCloud should be simple, not add to complexity example, through standardization and easier access toWe found that departments such as HR, Finance, Supply solutions – was mentioned by 39%.Chain and Procurement, Sales, Customer RelationshipManagement and Marketing are among the first to see the On the IT side, the preference to replace upfront investmentsbenefits of Cloud solutions. That is not surprising as the (capital expenditure) with more flexible, usage-based pricingbeauty of the Cloud is that it allows people to use powerful (operational expenditure) is clearly driven by the currenttechnology solutions without needing to understand the economic realities. The well-known move from capex to opexunderlying technology itself, or having to wait too long for it to was cited as a key IT driver for Cloud by 50% of respondents.be deployed. Also, the ability to quickly scale outward and inward – as requirements fluctuate over time – is highly valued (namedThis is likely to have significant implications in terms of the by 48%), as is the improved service to customers, bothfuture role of the IT department, as well as the relationship inside and outside the organization (cited by 37% andbetween the business and IT, because sooner or later the 34%, respectively).Figure 1: Who makes decisions about Cloud? Business Unit Third-Party Driven Decisions Driven Decisions IT Organization (Supplier/Vendor/ Driven Decisions Retailer/Distributor) 45% 9% 46% Reduced Reduced cost time to market Driving Moving from down costs capex to opex Operational efficiencies Ability to scale IT needs up or down rapidlySource: Capgemini, Business Cloud: The State of Play ShiftsRapidly. Fresh Insights into Cloud Adoption Trends, November 2012. 7
What To Do Next: ‘From Alignment to Fusion’ Clearly, as the business side of the organization becomes more and more comfortable driving Cloud adoption and execution, the role of IT has to adapt to this changing dynamic. What is more, the balance between IT demand and supply is not only shifting; it is being redefined. Cloud is an important catalyst to a true fusion of business and IT, rather than ‘just’ an alignment. From the IT perspective, while it may not seem to be the case on first impression, these shifts mean that there really are better opportunities than ever to create tangible value by leveraging the advances in technology in close proximity with the business. Working together, IT and the business have the chance to jointly develop a Cloud strategy and roadmap, architectural design and even (IT) governance, so there is a shared and end-to-end responsibility and ownership of Cloud. And in turn, IT can become an integral part of business change. However, failure to acknowledge the change in the balance of control and adapt to this shared approach could lead to a greater divide than ever between business and IT. This in turn could lead potentially to the business taking care of Cloud-driven transformation unilaterally, leaving behind an IT department confined to maintaining the existing, legacy IT landscape and – ultimately – repairing the possible damage. In our view, this is not, a desirable scenario for the business, and is certainly one that can be avoided by both worlds meeting together in common cause. We believe it is crucial that IT takes a positive and collaborative attitude towards the business, in embracing and maximizing the benefits of Cloud.8 Simply. Business Cloud.
Cloud the way we see itRaising Expectations:The New Cloud BenchmarkAs the business takes a greater role in Cloud decisions, terms of the availability of flexible, easy-to-deploy and sharplybuyer and user expectations are changing to reflect this new priced solutions. And a range of qualities demonstrated byreality. Key to this has been the development of public Cloud Cloud solutions is rapidly becoming the new norm againstmarketplaces, such as those from Amazon Web Services, which IT departments are measured in terms of performanceMicrosoft and Salesforce, which have created comprehensive and quality of service.catalogs of Cloud solutions, providing a broad range of “pay-as-you-go” services. The seven qualities below make up what we refer to as the new Cloud Benchmark and which, in our experience, theThe ubiquity and ease of purchase of these services has business has come to expect in this new Cloud realitycreated high expectations, mainly on the business side, in (Figure 2):Figure 2: The New Cloud Benchmark – 7 Key Qualities Low costs High flexibility Extreme scalability Easy, self-service marketplaces Speed-to- implementation Pay-per-use Standardization and simplicitySource: Capgemini 9
1. Low costs: Reduced costs result from economies of scale, building on the same “multi-tenant” solutions that are provided to multiple clients, with a high degree of standardization and minimized upfront investments. 2. Speed-to-implementation: Organizations can move more quickly (typically in weeks instead of months) with solutions that can be selected and deployed rapidly without expensive and lengthy preparations or investments. 3. Extreme scalability: Organizations can achieve infinite elasticity, effectively dealing with occasional or seasonal peaks and troughs in demand, without significant upfront design efforts or investments. A business can start small for a handful of users, and then scale-up (or back down) quickly and easily. 4. High flexibility: Access to innovative, up-to-date solutions from any place and any device provides significantly increased flexibility and agility, without the need for an expensive rollout and management of fixed assets. 5. Pay-per-use: The usage-based model is rapidly becoming the new norm, enabling organizations to pay for solutions based on actual usage and subscription-based pricing, avoiding the need for capital expenditure. 6. Easy, self-service marketplaces: Business users can select and activate standard solutions through easy-to-use, self- service portals and catalog-based marketplaces, without the requirement for intermediates. 7. Standardization and simplicity: With multi-tenancy and adoption of open standards, Cloud provides effective, proven solutions that are more straightforward to deploy and manage, and also less inviting to customize. In fact, by their nature, Cloud solutions are standard and simple. What this new Cloud Benchmark demonstrates is that the main impact of the Cloud is not in fact in technology. Rather, it is the reshaping of the flow between demand and supply, both within an organization and between organizations. Also, by means of all its key qualities, the Cloud provides an indispensable driver for Digital Transformation, harnessing the power of the new digital economy to change the way we reach out to clients, run our operations, and even conduct our business.10 Simply. Business Cloud.
Cloud the way we see itWhat To Do Next:‘Cloudification’Both the business and IT sides of an organization should prepare to get ‘Cloudified’: by this we mean takinga systematic look at every activity and service to assess what impact Cloud could make, and applyingthe seven key Benchmark qualities described. Taking a Cloud perspective alters the way we think about,for example, how to create the next level of customer experience, or how to drastically optimize internaloperations. And it can even make us completely rethink our current business models.Business: embrace the change potentialFrom the business standpoint, it is not just a matter of finding inspiration in the new generation of Cloud-based solutions available on the market (although much can be gained from quickly embracing some oftheir breakthrough services). But also about systematically applying the new Cloud Benchmark to existingprocesses and services, and finding fresh and unexplored perspectives.Each of the seven key qualities can drive this journey, for example: What if your order system couldstandardize your order processes across the globe, quickly bringing much needed standardization at afraction of the current cost? What if you could supply new subsidiaries with an F&A solution that smoothlyintegrates with your central systems, without the need for time-consuming local implementations? What if yourMarketing & Sales department could access new social media management support in weeks, rather thanmonths? What if all of your suppliers could be connected in real-time to your Procurement department? Whatif you could access powerful predictive forecasting tools without the need for costly, upfront expenses?IT: What would Amazon do? Similarly, the new Cloud Benchmark provides guidance to an IT department that’s keen to improve its performance. In particular, today’s public Cloud marketplaces - such as Amazon Web Services, Microsoft, Google and Salesforce - bring a wealth of inspiration. Again, this is not only true for the solutions being offered- although many are viable cost-effective, flexible and up-to-date alternatives to the existing stack of solutions.But it is also true in terms of the catalog of IT services being provided to the business, the way these servicesare being measured and invoiced, the level of self-service provided, the scalability of services, and the speedof supplying IT services. “What would Amazon do?” is the critical question that every CIO should be askinghim or herself when looking to improve their own IT services. 11
Cloud the way we see itTaking a Step-by-Step AdoptionApproach to Cloud MaturityEvolution not revolution business activities and processes. In addition, the obviousWhile expectations of the Cloud are high – particularly on the economic advantages are bound to shift the balance in thebusiness side - the majority of organizations have already forthcoming years, where national legislation allows.developed a specific Cloud strategy that takes a careful, step-by-step approach to implementation and achieving Cloud Cloud Orchestration manages complexitymaturity (Figure 3). Sixty-four percent of respondents in our The inclination for step-by-step, evolutionary adoption ofstudy are at the “maturing” stage, while 17% said their Cloud Cloud, rather than a more “big bang” revolutionary approach,adoption is “close to maturity.” together with the increasingly high expectations about the benefits that Cloud can deliver, could result in a degree ofOur findings also show that private Cloud solutions are still friction within organizations. It is not difficult to imagine apreferred (named by 66% of respondents). Uncertainties scenario in which the lines of business want to quickly procureregarding regulatory compliance, data sovereignty and public Cloud solutions to deliver immediate, new businesssecurity are keeping organizations from fully embracing value, while the IT function prefers to take a slower, risk-public alternatives, although this seems to apply less to new mitigating course that uses private and hybrid clouds.Figure 3: Taking a Step-by-Step Approach to Cloud Implementation 5% 14% 64% 17% Embarking Early Adoption Maturing Close to MaturitySource: Capgemini, Business Cloud: The State of Play ShiftsRapidly. Fresh Insights into Cloud Adoption Trends, November 2012. 13
What To Do Next: The Orchestration Perspective As described earlier, Cloud can indeed bring a true fusion of Business and IT. But, on the other hand, differences in pace, rhythm and priorities can also widen the existing gap between the two worlds. Good reasons for caution The reticence regarding Cloud – more often experienced by the IT side of the organization – is understandable: solutions can be sourced from a multitude of vendors and they all need to be integrated in a secure and unified way. Different vendors may also provide different service levels and support different standards, especially in a market that is still maturing, and managing this ecosystem can prove to be a time-consuming task, just as much as monitoring and implementing updates, new releases and innovations. However, sooner or later public Cloud scenarios will prevail, because of their obvious economic benefits, but in the meantime, the industry faces many years of hybrid deployments in which a volatile mix will evolve combining public Cloud, private Cloud and on-premise solutions. Keeping it Simple So before an organization realizes it, there can be a whole new level of Cloud complexity on the management agenda. This is in sharp contrast to the initial attraction of Cloud - its simplicity: a business wants to focus on achieving the benefits of using Cloud, rather than on managing its complexities. Taking an Orchestration perspective however can protect the majority of the organization from this paradox, by offloading the management of Cloud complexity to a separate service or organizational entity. The IT organization therefore has an important opportunity to pro-actively take up this role (particularly if it appears that its remit is becoming more dispersed and even fragmented). Cloud Orchestration and the marketplace For IT, this would mean the orchestration of the different Cloud resources, integrating existing and new solutions, and mixing public, private and hybrid scenarios. Ultimately that could lead to an organization-specific marketplace or catalog-based platform of Cloud services to be selected, activated and deployed and that could inspire the business to address their challenges in fresh and powerful ways. From a business perspective, they would ostensibly see a simple catalog. But ‘behind the scenes’, there would not just be a number of providers and vendors, but everything beyond, managed by IT; solution releases, integration, standards, functional interoperability and master data management, security and identity management, and service levels. IT’s orchestration function would take care of not only the complexity of managing this evolving ecosystem, but also keep a close eye on market developments and new solutions on the horizon. Cloud orchestration provides the hub that connects the fast-evolving needs of the business together with the robust foundation of corporate IT. The central catalog and marketplace should be defined and developed in close collaboration, finding a subtle balance between ad-hoc needs and the tendency to be “complete” and “in control”. A Cloud-orchestrated catalog should be an inspiration and driver for business change, not a restriction.14 Simply. Business Cloud.
Cloud the way we see itCloud: Already the Default forPowering New Business SolutionsMany organizations indicate that they consider the Cloud to be high-growth “edge” business activities, such as socialmuch quicker for implementing new solutions rather than for media management, customer experience management,replacing existing business applications. In our research, 78% human capital management, analytics, smart utilitiesof respondents said they are focusing on new applications and collaborative procurement, where the typical Cloudfor Cloud adoption (Figure 4). Similarly, in the development constraints are not so naturally apparent.area, the focus is also on new applications (named by 83% ofrespondents) rather than on redeveloping legacy applications. In this context, Cloud solutions are becoming almost a de facto standard. The implication is that these applicationsEdge initiatives - a natural fit for Cloud are easier and more cost-effective to run from the Cloud, asIn particular, organizations are showing an appetite – despite opposed to legacy applications with their built-in risks andall valid inhibitors – to use Cloud for innovative, high-value, migration issues.Figure 4: Does your Cloud adoption focus on new applications?(Percentage answering “yes,” by region and sector) 78% New Applications Total 77% 76% 74% 92% NAM EMEA APAC SAM 84% 77% 80% 69% 68% 74% Retail Financial Energy/ Public Manufacturing/ Telecommuni- Services Utilities Automotive cations/MediaSource: Capgemini, Business Cloud: The State of Play ShiftsRapidly. Fresh Insights into Cloud Adoption Trends, November 2012. 15
Cloud the way we see itWhat To Do Next:Close To The EdgeFollowing the ‘Principle of Least Effort’, organizations should look for areas that are particularly suitable forbenefiting from the Cloud, without having to deal with restrictions and inhibitors that may apply elsewhere.Already a defaultWhat we are increasingly seeing in the market is that the public Cloud is becoming the default platform forstart-up companies or corporate spin-off businesses. This is supported by our research that finds that Cloudis also the de facto for activities “at the edge” of a business: activities that are new, experimental, rapidlygrowing, and value-adding are particularly suitable. We have already mentioned areas such as Social CRM,Human Capital Management, procurement and business-to-business collaboration, but equally innovationsin supply chain management (such as the demand-driven supply chain) and finance & administration (forexample financial transparency and daily close) could classify for Cloud-enablement.Anything elasticClearly, the extreme scalability of Cloud makes it particularly suitable for activities that show demand spikes,are difficult to predict in terms of volumes and loads, or have a temporary need. Cloud could therefore beapplied to seasonal activities, such as holiday period sales, to the launch of a new mobile application withlimited prediction of user take up, or monthly analysis and reporting that is resource-intensive.Furthermore, development and testing activities that are short-lived and with fluctuating demand will alsotypically be highly suited to Cloud solutions. Of note is the concept of ‘Test & Drive’ in which organizationscan test drive a new market solution (for example analytics, mobile device management or simply new ERPfunctionality), without the need to set up infrastructure, acquire licenses or install software.Power of SMACOrganizations are most successful with Cloud when they combine it with other powerful technology driversbehind Digital Transformation, in what is being called SMAC: Social, Mobility, Analytics (or more appropriatelyBig Data) and Cloud. The more these forces are combined, the more impact is achieved.So whenever an organization is considering using or creating solutions in these areas, the first option shouldsimply be the Cloud to enable them. Moreover, organizations that are looking for new, fruitful areas to benefitfrom Cloud will find a wealth of inspiration in activities that apply social, mobility or analytical technologies. 17
Defining Cloud: Moving Beyond the Boundaries of “Just” Computing The days of Cloud evangelization are over. Nowadays, the technology industry largely agrees on the definition set by the U.S. National Institute for Standards and Technology (NIST), which states: “Cloud computing is a model for enabling ubiquitous, convenient, on-demand network access to a shared pool of configurable computing resources (e.g. networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction.” In other words, the Cloud builds on advances in technology to quickly and effortlessly supply IT services. The definition distinguishes between three key service models: • Software as a Service (SaaS): applications running on a Cloud infrastructure. • Platform as a Service (PaaS): a Cloud- based infrastructure for applications development and deployment. • Infrastructure as a Service (IaaS): providing processing, storage, networks and other fundamental computing resources. Finally, it describes four models to deploy the Cloud: • Private Cloud: provisioned for exclusive use by a single organization. • Public Cloud: open use by the general public. • Community Cloud: provisioned for exclusive use by a community of consumers from organizations that have shared concerns. • Hybrid Cloud: a composition of two or more Cloud infrastructures – private, community or public. Today, the impact of the Cloud is moving beyond the boundaries of “just” computing, and it is redefining the way processes are being run and provided as well. This brings us to one additional service model: Business Process as a Service (BPaaS), which provides full business process services, enabled by Cloud applications and infrastructure.18 Simply. Business Cloud.
Cloud the way we see itIn ConclusionFrom our research and client work, it is clear that the impact effective, without being impeded by the inhibitors andof Cloud is moving beyond the domain of the IT function, and obstructions that apply elsewhere.is becoming an integral part of the entire business. BusinessCloud is therefore developing into a powerful driver for For Capgemini, Cloud has become a ubiquitous designchange: it is the future of business and technology fusion. principle that underpins the majority of our business solutions and is integrated into our service approach. Thus, in theseIn this paper, we have suggested four next steps that uncertain economic times, we can help our clients realize theorganizations should consider when looking to increase their transformative impact of the Cloud on their organization.benefits from Cloud: Our Cloud Orchestration services help clients to access this• Adopt a Fusion not Alignment Approach: Couple power without having to deal with integration and multi- the energy and drive of the business, together with IT’s vendor issues. We remove Cloud barriers and hide the objective technical know-how, in a joint end-to-end complexity: something you expect from the Cloud in the first approach that will ensure the organization maximizes its place. We can help articulate a Cloud strategy, find the best investment in Cloud. starting point, and establish roadmaps and architectures, all the way from infrastructure via applications to your• Get ‘Cloudified’: Systematically apply the unique qualities business processes. of Cloud to every dimension of the organization - from business processes and activities, to IT infrastructure and As your Cloud partner, Capgemini can enable you to applications - to identify the best opportunities for true optimize your results from the Cloud without having to face Digital Transformation. the complexity of multiple suppliers, integration issues and emerging technologies - balancing your in-house IT• Apply an Orchestration Perspective: Orchestrate the with Cloud. In the end, whatever the solution, it’s about quickly-evolving landscape of Cloud providers, vendors and your business benefiting from Cloud, not about Cloud solutions so that the business side is not confronted with itself. It is no longer about the journey to the Cloud, but the the complexities of security, integration and service levels, Cloud-enabled journey. and can instead focus on employing a powerful catalog of business-oriented Cloud services. Find out more at www.capgemini.com/cloud-services• Move close to the Edge: Explore the edges of the Simply. Business Cloud business, where the benefits of Cloud can be most 19